Section 20 notice required even if we have the money?

Section 20 notice required even if we have the money?

10:11 AM, 29th July 2021, About 2 months ago 3

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Hello, I help run a block of 18 flats, the Residents Association was set up when the flats were built and is run by a dedicated few owners. The residents were given the opportunity to purchase the freehold (which we did) after the freeholder went into administration.

The Residents Association decided to up the service charge a while back to pay for anticipated repairs, which has been no problem. We now have the required amount of money(£30,000+) to carry out said repairs, which is great.

My question: Is the RA or freeholder required to issue a section 20 notice to all the owners even though the RA has the money and is not asking the owners to contribute anymore?

Thanks in advance for any help

Regards

Rich



Comments

by Y Lana

12:14 PM, 29th July 2021, About 2 months ago

First things to say are that the RA and the freeholder are two separate legal entities, even if run by the same people. And it is the freeholder, not the RA, that has the legal capacity to commission works to the block.
The freeholder must consult the RA and any party expected to pay the resultant bill if the unit cost will be over £250 inc VAT for one-off jobs, or £100pa on an ongoing basis (e.g. annual contracts). Fail to do this and, if challenged, the freeholder will only be able to recover the above limits, irrespective of what they actually spent.
If everyone being billed is happy to proceed they can waive their S20 rights, though I would advise that the freeholder get this in writing. Note that even though the RA is holding the money, it still belongs to the residents and a challenge by a single bill payer can easily upset the apple cart.
While it might seem a lot of faffing about, for the sums involved (1.6K/head; 250 cap; potential loss 1.4K/head), I'd advise that you follow the procedure.

by Mike in Worthing

18:13 PM, 29th July 2021, About 2 months ago

Section 20 must be complied with when you SPEND the money, not when raising it.
As Lana Y rightly advises, follow the procedure.

by Puzzler

12:37 PM, 30th July 2021, About 2 months ago

Yes you must go through the process. It gives the leaseholders the opportunity to put forward suggested contractors and you must choose either the cheapest or one recommended by a leaseholder. It applies to any works that will incur costs equivalent to >£250 per unit. See Lease.org


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